Give Your Kids a $ 25,000 Graduation Present
Posted by M.S. on April 25, 2010
It’s graduation time of year again and a great time to ask yourself: What would be the best gift you could you give your children when they graduate from college or head out on their own as a young adult?
How about a nice fat nest egg to get them started? We built a $25,000 stock portfolio for each of our children that we gave them when they each graduated from college-debt free! We are just ordinary people that accomplished this and you can do it too!
Click below to view my You Tube video showing exactly how we did it and you can do it too:
When our children were born and people wanted to get a gift for the baby, we asked family & friends to give us the gift of money that we would invest for them. We felt this was a much wiser choice than some new toy that would soon be worn out or in which they would lose interest.
We set up a very low cost stock index mutual fund (such as the S&P 500 Index Fund) along with a general stock mutual fund for each child and started investing.
Read more about S&P 500 funds Click Here
When the children were old enough to start working, we wanted to really encourage their frugal living and investing, so we made them an offer they could not refuse!
For every dollar they contributed to their savings, we would match it–so they would double the amount of money they had to invest!
That gave them extra incentive to work hard & save a large percentage of what they were earning or receiving as gifts!
We knew that compound interest is a powerful force that can reap huge benefits and we wanted them to benefit from it!
See the power of Compound Interest. Click here: Compound Interest Calculator!
We set up a spreadsheet that we reviewed with them periodically to demonstrate how much richer they were getting. They became much more enthusiastic about saving their hard earned money after they started to see how their investments were earning them “free money” they didn’t have to earn by working.
On the day each of our children graduated from college, debt free, we switched the entire portfolio into their name!
They EACH had a nest egg of over $25,000 to begin their adult lives at 22 years of age!
That’s a whole lot better than a bunch of smashed up old toys and NO money!
Wouldn’t that be a fabulous graduation present for your children or grandchildren too?
PFCoach » Best Money Tips: 7 Ways to Help a Family Member Financially said,
[...] Give Your Kids a $25,000 Graduation Present — This idea for gifting a giant nest egg to your recent college grad is ambitious, and anyone can start it as early as birth. I love these tips! Frugal to Rich [...]
Jason said,
Did you set up a UGMA acct for this? Also, how did this impact financial aid fir college? My understanding is the UGMA acct kills financial aid for due to how it is calculated.
Sarah said,
I think I’m going to start reading your blog faithfully!! I posted on your Youtube page, that I’d seen your video entry. In case you dn’t see it, I want to tell you how happy I am!
I’m really excited about it. I have a 2 1/2 year old and have been doing the buy the nice yard sale and goodwill toys instead of brand new ones (though we do get some fantastic 75% off Target toys!) for most of his holidays and general needed items, so that I can try and save a little each month for his future. He’s got everything he wants, toy wise, and it gives me the chance to spoil him, without overspending.
Right now, his savings are in a CD that matures in December, then I plan to get some index funds. Sometimes I get a little destressed thinking that I can’t put in as much as I want towards his future since it’s usually just a few dollars a month, but hearing your success has made me realize that you did it, doing so many of the things I’ve been doing, I can do it too!!
M.S. said,
Hi Jason: If you are as frugal as we were, you shouldn’t need to get any financial aid by the time your children are college age. If you start saving 50% of your income starting in your mid 20s and increase your income steadily, you can pay the college bills out of savings. The answer is yes–this saved money for your kids will be counted towards any financial aid package- but let’s hope you never need to go that route!
M.S. said,
Thanks so much Sarah! You are just the type of person I would love to reach with this blog and video! It is the greatest feeling in the world to help your beloved kids get a wonderful start on their future with this type of nest egg! It also was a fabulous tool to teach them the powerful value of starting young to save and invest! They are continuing to build their financial futures now! The best part is–it is easily accomplished–with discipline and time!
How to Give Your Kids $25,000 at Graduation | FavStocks said,
[...] a piece on how one couple gave their kids $25,000 ($25k to each kid) when the kids graduated from college (which they did debt free, BTW). The steps of how they did [...]
Momonabudget said,
Great advise M.S., but I just don’t have the money! My 12 year old daughter is graduating from elementary school this year and all she wants is a cell phone to gossip with her friends. She actually the only one without a cell at this point. So, I just got her the NET10 prepaid plan because I pretty much refuse to pay for all the bells and whistles that often come with the contract cells. My hope is that I’m not just giving her a cell phone, but I’m also teaching her the very basic concept of budgeting and time management. Since she will only get 150 minutes a month ($15 is all I can afford a month for this) she will have to watch and monitor how she uses the cell very closely. The NET10 plan is pretty affordable at 10 cents a minute and 3 cents a call so I think, at least at first, the 150 minutes should be plenty. The phone is really nice – it’s a Samsung T401 slider phone so I think she’ll be happy. And I’ll be even happier just thinking that, if I can’t give her $25,000 later, at least I can teach her the basic principles so that eventually she can save her own.
How to Help Your Kids Build $25,000 Stock Portfolios | Lock in a good rate.com said,
[...] how Mary describes her method in a post at her site, Frugal to Rich: When our children were born and people wanted to get a gift [...]
How to Help Your Kids Build $25,000 Stock Portfolios | Financial News and Information said,
[...] how Mary describes her method in a post at her site, Frugal to Rich: When our children were born and people wanted to get a gift [...]
How to Help Your Kids Build $25,000 Stock Portfolios | CashBlogged Blog said,
[...] how Mary describes her method in a post at her site, Frugal to Rich: When our children were born and people wanted to get a gift [...]
M.S. said,
Well–that is one approach. Frankly, that’s not what I would do though. I would tell her if she wants a phone, she can earn the money to pay for it. There are lots of things she can do–our kids did them! Feed the neighbors cats, take in their mail, shovel snow, cut grass, etc etc. No freebies! She will value the 150 minutes of cell phone usage alot more if SHE earned it! Best of luck!
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